Regional Economic Integration

1. The economic case for integration

1.1. opening a country to ee trade stimulates economic growth, which creates dynamic gains om trade.

1.2. Although international institutions such as the WTO have been moving the world toward a ee trade regime, success has been less than total. In a world of many nations and many political ideolo¬ gies, it is very di icult to get all countries to agree to a common set of rules.

1.3. Regional economic integration is an attempt to achieve additional gains from the free flow of trade and investment between countries beyond those attainable under international agreements such as the WTO

2. The political case for integration

2.1. Linking neighboring economies and making them increasingly dependent on each other creates incentives r political cooperation between the neighboring states and reduces the potential r vio­ lent con ict. In addition, by grouping their economies, the countries can enhance their political weight in the world.

3. political ideology toward FDI within a nation has ranged om a dogmatic radical stance that is hostile to all inward FDI at one extreme to an adherence to the noninterventionist principle of ee market economics at the other.

4. Levels of regional economic

4.1. Customs union: eliminates trade barriers between member countries and adopts a common exte al trade policy

4.2. Common market: - has no barriers to trade between member countries, includes a common external trade policy, and allows ctors of production to move eely between members.

4.3. Economic union: entails even closer economic integration and cooperation than a common market. Like the common market, an economic union involves the ee flow of products and factors of production between member countries and the adoption of a common external trade policy, but it also requires a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy

4.4. Economic union: involves the free flow of products and factors of production between members, the adoption of a common external trade policy, and in addition, a common currency, harmonization of the member countries´tax rates, and a common monetary and fiscal policy.

4.5. Political union: Interdependent states combined into single union. Requires that a central political apparatus coordinate economic, social, and foreign policy for member states.